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to '97, you'll really see that, of course, they are going down. you can't pay for growth forever, and you can't hold crisis levels of spending forever, so i think that's really the story. >> hey, rick. look, the fact -- >> can i? >> yes, yes, you can. >> thank you. i just want to make sure i understand the point. rick, is your point that this weak economic report we got today shows the economy is truly weak, or are you agreeing with the consensus that it shows that government spending was the reason for the weakness? >> no. i'm saying government spending isn't really addressing some of the main issues of weakness, and when did we -- when did we have an amendment saying we're banning recessions. if the economy is destined to be smaller to get healthy, let it happen. >> but hold on, rick. what was interesting about this report to my mind was that consumer spending and business spending actually held up in the
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face of government spending. >> that's a wonderful thing, and i like that thing. >> it reilly should be for investors the one of figuring out in a world that looks like it will be one of declining government spending, what will happen to private sector spending and investment? >> it will reallocate the capital better. >> hey, rick, you're not going to get the end result that you think you will. nothing makes sense. i agree 100%. guess what's going to happen? we're going to get a housing recovery, and this is the time to start having a conversation with your bond portfolio because we've gone above 2 for the tenth time and go back below at some point, but we're actually going to see enough growth to push the ten-year treasury up higher than it's ever been. >> i hope so. >> that's a very good point. >> i hope we have the housing sector going nut. i don't want the printing press going nuts. >> yeah. >> jump in here, ed, because here's what we've been seeing recently. stocks are really becoming a favorite over fixed income. >> sure. >> do you think that continues? >> a couple of things. everybody in this country needs to listen to what rick is saying
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because the printing presses are killing this economy, and we are seeing right now $85 billion being printed buying long-term bonds to try to keep interest rates lower. you're seeing the ten-year treasury rise which is pushing more money into the stock market. >> consumer spending was up. >> we're at 4% -- >> how is it killing the economy? >> he says how is it killing the economy is what steve is asking you? >> the printing of money? >> oh, absolutely. look how much things are going up in price and look at your gdp new. you look at the gtp nu, i at zero negative. >> what does the fed's printing press have to do with the gdp number? the gdp number was caused by the government spending, specifically defense spending. >> which was deficit spending, printing press! >> steve, you're absolutely wrong there. >> what does it have to do with the printing presses? >> what i'm saying part of it, you can't blame it all on government spending. >> yes, i can, as a matter of
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fact. i can blame it on inventory from government spending. >> hold on. >> would you be willing to admit that the foundation of the economic recovery thus far has been housing and that the fed by its policies of late have at least somewhat helped the recovery in housing which has helped the overall economy which has helped the stock market go up. >> what recovery? we're at a negative gdp. >> it hasn't helped housing but it's about to. >> a recovery in housing. let's at least establish that. >> you're saying leading the economy is housing. housing is doing better, but the economy is -- we have a negative print on the numbers. >> that's the best strategy. don't look at the details. only look at the top line and take it at face value. that's your strategy? >> consumer spending, business investment is up. >> 8.9 boston on business spending, that's irrelevant. >> the strategy for investors right now is to shorten up the duration in their bond portfolio. i don't care what you say, we're going to have inflation. >> because we're going to grow or because we're going to have
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inflation? >> we already have inflation. >> what inflation? >> the answer to that -- the answer to that is yes, unfortunately. that's the answer. >> wait, wait, what particular inflation are you looking at? >> we're -- >> oh, come on, come on. >> steve, look at oil. >> come on, give me a break. >> i follow 15 inflation metrix and none of them. >> do you believe -- if you believe the cpi number, then i've got something to sell you out in arizona. >> a bridge. >> there we go. >> give me something to believe -- give me something that you believe in. what do you follow. >> the cost of living increase is going up about three times more than what the government -- >> give me an index -- >> food prices, oil prices. >> food prices. >> food and gas is 12% of consumer spending. it's 12%. is that how you want to make policy on 12%? i submit that as a clever tact. >> how about health care costs? >> can i ask ed a conversation and bring the question back to the stock market. >> okay. >> we're not that far from dow 14,000. >> that's right. >> we're not that far from
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all-time highs. how have we disassociated ourself with what your vision of where we are is and what the stock market is doing, because clearly the stock market thinks we're doing better than you and some other people think that we are? >> or there are no alternatives to stocks so you have to put your money because of the fed policy. >> not only that. >> and that has very little to do with the economy. >> the stock market moves based on the top 20 stocks in the s&p 500. we all know that. the stocks, capital weight that had are moving. most of their earnings growth is coming from outside of our borders. that's why you're seeing stock prices rise. in addition to that, money is being shoved into stocks because they are getting out of bonds. >> what's wrong with that? >> there's nothing wrong with it. i love it. people are making money. >> i love it. >> we're all happy, but don't misunderstand that the stock market going up is not an indication that the economy is good. >> bingo. >> there are those who would look at the movement in rates that we've seen as well and say that that's a sign, at least in some respect, that the economy is getting better, the fact that you have yields rising. >> you do have the greatest
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situation in a long time for the corporate sector, let's not forget that, $3.6 trillion of cash on balance sheets. that's also got to be a good indicator for this economy. >> you had a panic buy, and i'm sure rick would support me on this, at least i hope so, a panic buy into our bonds when things were breaking down in europe, just like today when we saw the numbers, you saw yields basically buying into our bonds as well. people buy our bonds when they are afraid around the world. that's why yields went down. now they are going back to a more normal level. >> bottom line, what do you want to do with your money in this environment? do you want to continue on this train of buying stocks or look at it and say, okay, maybe these fundamentals don't add up? >> stocks are still cheap relative to earnings where interest rates are, should be selling would have their proper valuation. i think stocks are 15% to 20% below where they should be? >> nathan, do you agree with that? >> i increased my stock position by 5%, maria. still watching my bonds. there's not much left in bonds. you can only squeeze so much out of this turnip, so you have to look at your bonds and shorten
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your duration, for sure. >> thanks, everybody. >> yeah. >> okay. >> good conversation. >> never mind. >> it's crazy to say that the -- that the fed is killing the economy with $85 billion in the printing press and stocks are 15% undervalued. i'd love to put those two thoughts together. >> all right. >> you said we're out of time but i'm always ready. >> give me one last point and we'll move on. >> we all have to understand we can look at the micro on everything that i like to do, but the bottom line you're costs are going up, steve, at a much higher rate than the government reports. the economy is slow, getting weaker and people don't have clarity for the future. >> corporate margins are surging. >> no common sense here. >> corporate margins are way up because input prices are lower. that's not what the corporations are saying. that's why their profit have maintained because one reason is their input price, producer prices have been tamed. i wish somebody would send me the metric to back up what you're talking about. >> it will be in your e-mail box tomorrow. >> send me some data. >> appreciate it.
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see you later. then there is facebook. the stock has been on fire storming back after dropping below $18 a share. remember that? following the ipo debacle, but as the company is set for the third-quarter earnings report after the close tonight, the stock is still below that ipo price of $38 a share. let's check in with julia boorstin previewing the one number that investors should be watching as we get the numbers after the bell. over to you, julia. >> maria, i think the most important number to watch for facebook is revenue growth, and investors really want to see that growth accelerate. in the fourth quarter wall street is projecting a 35% growth, up from the 33% in the prior quarter. now the second most important number to watch for is the success of facebook's mobile strategy. that's the percentage of advertising revenue that comes from mobile. it was 14% last quarter. it should be a good ten percentage points higher than that this quarter. we'll be listening very carefully on the earnings call for any projections that ceo mark zuckerberg makes, especially about new businesses,
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particularly the gifts business as well as the graft surge. in beta testing right now but would love to hear what that means for facebook's bottom line down the road. scott, back over to you. >> thanks very much. can't wait to see what facebook reports after the bell. 45 minutes until that report crosses. right now the dow industrials holding out down 32 points, 13,921. >> okay. big news from research in motion today. a name change, a new operating system, two new smartphones, and then there's alicia keys joining the company. stock not liking it. what's behind the move. >> a new report showing not only are banks too big to fail, they are bigger than ever and the bailouts would be bigger as well. details coming up on the "closing bell." ♪
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welcome back. a big day for research in motion. the company changing its name to blackberry effective this coming monday unveiling its highly anticipated operating system and new smartphones. not a warm welcome from investors. jon fortt at the event and joins
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us with more on the big bet. jon? >> reporter: maria, there's often a sell on the news effect with these events and also the reviewers, pretty universally positive on this device, but of all the reviewers i spoke to, i said would you dump your current phone for it? he said, i don't know. there's a question is this good enough? the u.s. launch comes in early march. that's a positive. it's not a thing where they are announcing it and maybe we'll get it in six months so that's good and alicia keys is joining rim as areat director. i spoke to torsten heinz in the last hour about what that means. he said she will be working on a project basis and will marshall troops behind her and bringing her message to the world. maybe that will help turn things around. more devices are coming this year. they will try to bring the bb-10 operating system to lower price points. maybe that expand the market a bit. smartphones are really growing and trying to grow in markets
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like north america which are largely saturated so those lower price points could be important for them. the big question though, will consumers switch? people who already moved off the blackberry to android and iphone? is there a single feature that will really entice them to come back. maria, you moved to the iphone and said you might go back so that's positive. >> i have news for you. i have an iphone and a blackberry so i'm already tiptoeing back because i have problems with the iphone as well. there you go. >> it's faster than the previous versions of the blackberry which you'll enjoy. there's a video that we have that shows the load times on the browser which was, of course, a gripe from people who had the previous versions of the blackberry. it's faster. i mean, the thing, take a look. it's loading. it's actually loading. >> yeah, that is fast. that is one of the frustrations. it's too slow. yeah, thanks, jon. >> sure. >> will the latest moves make blackberry cool again? let's ask tim stevens and also with us michael copeland of
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"wired" magazine and, tim, i'll begin with you. look, as i said to you and as john said, the reviews have largely been successful. they have been pretty glowing. i've heard people say it's a great device. there are others who are going to say i don't care. it doesn't have samsung written on it or one of these on the back, one of the apple logos and at the end of the day that's all that matters. >> i don't know there aren't that many people. apple and samsung, a lot of purists that want to stay there. i feel at this point it's a little too late. nothing stands out or is really fantastic about this device. people who went to the iphone would think about going back because they may have been frustrated with the keyboard on ios, a really good keyboard on the blackberry 10 but i don't know if it's enough to bring back the masses of people they need to rebuild themselves as a company >> you like it but don't think it's a game-changer? >> absolutely. need to come out with a big blockbuster and what they have is a nice phone, really nice in every regard but not really a
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standout in any way. michael copeland, what's your take? >> this remains me a little bit of palm when people got excited about the new operating system and slick and multitasked. people didn't care. web-os disappeared. this may be something similar. reviewers like it but there's too much of a cost to switch. i don't think blackberry will be able to keep up in the future. it took them long enough to get this out with the likes of samsung and apple and google and others. i just think it's too little too late. >> michael genovese, the stock has gone up 300% in the past month and a sell on the news event today. where does the stock go from here? can you advise anybody to buy it as it sits here today? >> well, i wouldn't. i mean, the way i look at it there's a small chance, maybe 10% it goes much higher but a 90% chance it will end up lower so i wouldn't advise it. the only thing that i've heard so far that i disagree with is that march is a good date for
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the launch. we were actually expecting mid-february. the u.s. march launch after they waste a lot of money on a super bowl commercial in early february and the 199 price point, i think it's going to be 149 or 99 to real make a dent in the market. otherwise, i agree. it's a beautiful os, but it's a little bigger and a little heavier than the iphone, and i just don't think consumers are coming back to rim, and that's the problem. >> huh. >> have to agree on the timing. we're going to see some amazing smartphones announced at that event and after that the z-10 might not look that hot. >> why would they do all of this investment in the super bowl commercial and not have the product for a whole month? >> i think things were coming together last minute. had to do some carrier testing. >> the delays on this thing have been on and on and on and on. how could anything be last minute at this point? >> i've been testing the device for the last week and getting a lot of updates. didn't even get pricing until last night. >> michael genovese, the stock,
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had a pretty good run-up. would you put money to work or no because of this product? >> if i could flip what i just said, because they are not launching it until march, could get potential for a little silliness to come back in and once the product comes out we could measure the numbers to see how it does and since the phone actually is not launching for another month and a half, you know, maybe next week we'll get the silliness back and will go from 15 to 18, so if you want to play for a little bit of a trade, maybe 20% upside, but for a long-term investment, no. for long term i'd short the stock. >> that's a strategy all right. 20% move. >> let me just come back to you one more time. bread and butter of research in motion has always been the corporate customers. how many -- what percentage of regular consumers like any of us here would have to buy this device to make it what the market would consider to be a successful device? >> yeah. so, look, i think they have to get into double digit market share of -- of the smartphones, and i think you're real looking
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at 15% plus market share. rim's market share of smartphones has fallen to 3%, 4%. you know, 10% would be okay, but they still wouldn't be making any money. they really have to have 15% plus. i really don't see that happening. >> yeah. >> especially with bad news coming from enterprises announcing they are not going to adopt blackberry 10 like credit suisse did the other day. >> that's the bottom line. >> how about all those tweets? everybody is tweeting about the blackberry. certainly is a popular conversation right now. whether or not it actually most of the needle on this company is another question. >> if research in motion was paying me to send out a tweet for the blackberry, i would, too. >> thanks, everybody. appreciate it. >> alicia keys is probably going to sing about it and get a paycheck for it. >> lady gaga is partnering with samsung. >> always a little bit of a bad sign. lady gaga partnered with polaroid, too, and look where that is. >> didn't really get them very far. >> thanks, you guys. appreciate your time tonight. see you soon. >> all right. we have about 35 minutes to go,
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and the dow jones industrials are at the lows of the day, down just about 14 points. maybe we've been down about 50 or so, but we've moved certainly further away, maria, from 14,000, that's for sure. >> perma bear marc faber gave me a dire warning on the show. take a listen to this. >> i'm sorry, maria, you don't own any gold, and you are in great danger because you don't own any gold. >> well, that was scary. should you heed his advice and buy into gold and the rest of the commodities index, or are you better off riding the rally in stocks? take a look at the trade, commodities versus stocks next. >> and should the surprise contraction in gdp push back the fed's plan to end the stimulus program? >> and thank you for helping cnbc's twitter account break that 1 million follower milestone. if you're not already part of the action, follow us @cnbc.
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hope you will and follow me on twitter @mariabartiromo as well as google plus. we're back with more of the "closing bell." ♪
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welcome back. no matter how the market ends the day we're in the midst of a pretty good bull run for stocks. despite the run famed investor marc faber telling me that there's much better bets for your money. >> i'm buying gold because i'm fearful, but i'm sorry to say,
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maria, you don't own any gold, and you are in great danger because you don't own any gold. >> so, should you bet on stocks or gold? and other commodities? let's start talking numbers. on the technical side of things j.c. o'hara with the phoenix partners group and charles or theel with newport partners. great to have you on the program. j.c., kick it off. stocks or commodities? >> let's keep this debate very, very simple. stick with the winner and the winner over the past weeks, months, years have been the equity market. look a chart for the s&p versus crb as a proxy. equities are higher and commodities lower. look at a chart of the s&p. i don't have to be the first one to tell you the s&p is break out to new 52-week highs. new multi-year highs. while commodities have been trading lower. stocks, higher highs and higher lows and commodity lower highs and lower lows, so right here i want to stick with the winner. >> j.c., this is charles.
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i respectfully disagree. it all depends what time period you go back into. go back to 1998, 1999 and do the comparison, what you see is stocks have not delivered for investors appropriate risk-adjusted returns. gold has been a consistent winner. not all commodities are great. i agree with marc faber but he's not pessimistic enough. we're in a dire situation covered up the administration. >> more than one of these banks has an equity position skinnier than lehman. who is going to bail them out? who is going to bail out the fed? >> i do agree when you say not all commodities are good. the crb, a basket of 19 commodities, commodities in there such as cocoa, coffee, sugar, orange juice. i wouldn't touch these charts.
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the crb is being pulled up by energy and right now crude is looking great. gasoline is looking great. also, i just want to highlight. you brought up 1998. i want to go back a little farther. 1993. we all know that commodities and stocks -- sorry, commodities and bonds have been inversely correlated. commodities actually give you a peek into what bonds are doing and actually bottomed before bonds topped in 1993 and that could also be a little hint into the outflow from the bond world into the stock world so let's keep an eye on the bottom here. >> what about gold? what about gold? are fox in great danger, grave danger, as he said i was because i don't own gold? >> i think so. i think you have to own gold. got to own physical gold outside the financial system. there are ways to do it. i won't touch the etf, and back on bonds, if you go back to just after bastille day last year, there's been a remarkable run up in the yield on the ten-year from about 1.40 to above 2%, that's not a good trend and
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rising nominal interest rates will shellac some of the opaque companies that have not reported good results yet when you really dig through them. >> gentlemen, we'll keep watching. thanks very much. good argument on both sides. we'll have to watch stocks versus commodities. see you soon, guys. >> thanks. >> scotty. >> maria, let's send it over to josh lipton for a quick market flash. josh, welcome to cnbc. what are you watching? >> thank you, scott. we're watching endo health enjoying a big possible here. here's the news. reuters reporting it's in exploratory talks to sell itself. reuters reporting possible suiters as warner chilcothe. endo down 15% over the past month. stock scott, back to you. >> thanks so much. >> meanwhile, this market is not at the lows but not too far from them. down about 42 points on the dow jones industrial average. >> our next guest warns deficit hawks to forget austerity because it would hurt, not help our economy, and here's the kicker. he's a conservative. you do not want to miss his argument, and he says today's negative number on the economy proves it.
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>> we'll take a look. investors have been could go an about-face meanwhile on facebook, but will the comeback continue when facebook releases the earnings news right after the close tonight? we are on top of the very important report from facebook. it's coming half an hour from now. back in a moment. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies. tdd#: 1-800-345-2550 i use their global research to get an edge. tdd#: 1-800-345-2550 their equity ratings show me how schwab tdd#: 1-800-345-2550 rates specific foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, momentum and risk. tdd#: 1-800-345-2550 and i also have access to independent tdd#: 1-800-345-2550 firms like ned davis research tdd#: 1-800-345-2550 and economist intelligence unit. tdd#: 1-800-345-2550 plus, i can talk to their global specialists 24/7.
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welcome back. breaking news. let's get to michelle caruso-cabrera with a developing story out of the middle east right now. >> reporter: a senior u.s. official has confirmed to nbc news that israeli warplanes have attacked syrian military targets near the capital city of damascus. the targets of the air strikes reportedly aimed at a convoy of trucks carrying a shipment of weapons to the anti-israel militant group hezbollah in neighboring lebanon. the vice premier of israel warned if there's any signs that seeria was losing its grip on chemical weapons there would be military air strikes. no reports that there were chemical weapons in this strike, the associated press saying it's anti-aircraft missiles. the first time israel has fired into syria since 2007. definitely represents an escalation of the situation there. syria, of course, in the midst
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of a raging civil war. back to you. >> thanks, michelle. our next guest has analysis of america's fiscal situation and the takeaway is this. despite our debt fast approaching $17 trillion, spending cuts will actually make matters worse. >> and the reason is it's getting so much attention is that john makin, a noted conservative economist, and is a resident scholar at the american enterprise institute. also with us is lindsey piegsa, an economist at ftn financial, and she sees things a little bit differently. john, we'll go to you first because the headline there is you mean to tell me a conservative economist says don't cut spending now. what's going on? >> well, maybe my credentials are in question, but, you know -- >> you'll get some phone calls after this. >> over the past three years the fiscal stimulus at the beginning of the year has averaged a 3.5% of gdp. this year it's minus 2. that shift i think is just too abrupt. i think eventually we've got to bring the deficit down.
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but this is too fast. probably going to get a skywest their will underscore that, and one of the reasons that g.dp was so weak this time was defense spending collapse because they saw the sequester coming. >> but we know the defense spending is going to happen. the cuts are going to happen in the next couple of months. what do you think that does to the economy. >> well, it adds about 100 billion of drag to what's already there from the tax increases we saw earlier in the month, and you put it all together and you've got 1.5% to 2% of fiscal drag instead of the usual boost so i think it will slow us pretty rapidly. you know, given that we're flat in the fourth quarter, it's not a good sign. >> when does the debt catch up to us then? i mean, do you worry about the $17 trillion debt, $16.4 trillion debt? when does that catch up? >> you know, i don't worry about it too much for two reasons. one, i tried to worry about it with japan and lost an awful lot of money betting on interest rates going up there. secondly, remember, interest rates on outstanding debt are
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about 80 basis point on average for the government so the debt interest rate burden is about 1.5% of gdp. that's about as low as it's ever been. we're lucky, but that's the way it is. >> lindsey, so what's the answer here? let's just assume that the -- that the sequester takes effect. >> sure. >> that you do have the pullback in spending. seems to me that would put an awful lot of pressure on the fed to try to do something even more. >> certainly. to the other guest's point, when we see this outflow of government spending from an accounting spending we'll see a net negative drag on growth. this was the concern when we talked about the fiscal cliff negotiations, and even today when we looked at the fourth-quarter gdp report the headline was certainly dragged down by volatile inventory cycles as well as that one-off decline in government spending but if we look at the components we see that the economy is very much on the same footing that it has been for the past several quarters.
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consumption was moderate. in fact we saw a pickup from the third quarter as consumers were able to take advantage of price reprieve at the pump. we saw fixed investment on the rise, predominantly a result of residential investment but corporations, too, putting funds to work in equipment and software to gain productivity. >> what's your take though -- >> we're very much in the same position without that noise. >> what's your take though on where the real economy sits right now? those will look inside today's report as steve liesman says, looking at the components whether it's consumer spending or business investment, it certainly wouldn't match the read of negative 0.1%, that the economy is doing better than what you would think. if all you looked at was the headline number from today. >> you do have to understand it's a healthier composition of growth. certainly from the fed standpoint it makes sense that the conversation has not changed to a removal of accommodation, and we saw in this statement the fed reiterating their commitment
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to an interest rate environment. >> let me jump in here and say something about gdp. i think it's really hard to say it was a good number. a negative number. yes, we had consumption and investment rising but nominal gdp, the size of the pie, was growing about 6% in the third quarter. it's now growing at 0.5%, and it's all inflation, defense spending collapsed, net exports were very weak, and if you adjust for inventories and inflation, we're still very weak. we're about half a percent growth. >> do you think that this is the beginning of a couple of quarters of contraction? do you think this leads to a recession? is this sort of telling of what's to come? >> i think so, yeah. this number represents a growing disconnect between the markets which are pretty point and happy and the real numbersry with not so good. i mean, the first number we saw for january was consumer confidence. that wasn't so good. friday's number unemployment will be a biggie, but i still think that we're going to see
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disappointing numbers, and we're off to a bad start with the numbers that we saw today in the fourth quarter. >> jobless claims trending in the right direction though. >> so if you looked at all of that, it's certainly -- i'm not saying that today's gdp report was good. i never use that word and i wouldn't looking at it the. >> it's not good. >> i hear you. but, look, i've spent 20 years trying to nail the employment number and it's a bug's game. i don't know what it's going to be. >> you should do the "squawk on the street" contest. maybe you'll get a backpack or something. claims don't really work. nothing really works. i do think the one thing that helps a little bit is the hard-to-get versus easy jobs number in the consumer confidence that deteriorated quite a bit. that was a january number, so, you know, i -- i don't have much to argue with as far as the consensus goes of, you know, 125 to 150. wouldn't be surprised with 100. >> thanks so much. thanks, everybody. we appreciate it. lindsey, good to have you. thank you so much, john.
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>> thanks. >> 20 minutes to go before we close it up here and we're at lows of the day, down 52, almost at 13,900, certainly a far cry from 14,000, right? >> it's true. 52 points. now, this is the low actually. so if you think the government solved the problem of too big to fail, think again. in fact, a startling new report says that the issue is worse than ever, and it could cost taxpayers even more if another crisis were to hit. >> plus, mortgage rates are rising, and that's slamming the door shut on refinancing. if the refi market is dead, what does that mean to bank stocks? [ male announcer ] you are a business pro. omnipotent of opportunity. you know how to mix business... with business. and from national.
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welcome back. despite a host of new regulations well street is still too big to fail according to a special investigator with t.a.r.p. >> reporter: sigtarp says it's too early if dodd/frank eventually eliminates too big to fail but as of right now it's still a problem and the economy is equal to a house of cards collapse. what caused the crisis still remain.
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firms remain too interconnected and according to jpmorgan's london trading loss and the recent libor scandals as examples. what's to be done to get to the roots of these problems? sigtarp, among the steps recommended, regulators should take or insentivize firms to reduce their size and complexity. second, increase capital and liquidity requirements for financial firms though the report declines to say if these requirements should go beyond those dictated by the global basal standards and progress made with these levels with big firms. third, regulators should limit leveraging companies but again to declines to say what levels. sigtarp saying regulators should decide the final numbers and sigtarp recommends they reform their risk management with an increase focus on counterpart risk. the federal reserve, which regulates these systemically important firms, declined to comment on the report. maria, back to you. >> all right, mary, thanks very much. we'll keep watching that.
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15 minutes before the closing bell sounds for the day. a market that is down about 45 minutes on the industrial average. >> a dismal gdp report putting dent in this market rally. do we bounce back tomorrow, or is this the start of the pullback that many have predicted, and how long can bonds keep going without a big move out of that group? alexandra lebenthal will join us later on "closing bell." stay with us. [ wind howls ]
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welcome back. another market flash for you. right over to josh lipton we go. hi, josh. >> hi, maria. we're watching blackberry right now. the company formerly known as research in motion, the company just lost another friend on the street. s&p now lowering its recommendation on the stock to sell from hold. this coming on the heels of the
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company's big unveil today of the blackberry 10. s&p analysts saying they believe the new devices will do more to retain existing blackberry subscribers than to lure new subscribers, the stock at the lows of the recession. back to you, maria. >> thank you so much. in the final minutes of trading right now. dow 14,000 appears to be on hold. at least one more day. we're fading in the last hour of trading, last few minutes, down 52 points on the dow. >> joining us now to break down the market, erin gibbs, chief executive officer of investment capital iq. nice to see you again. >> nice to see you. >> as we continue this march towards 14,000 with a pause today obviously. >> obviously with the economic news we were expecting a bit of a pause today, but still looking at about s&p 500 being up 10% for the year, and we're still seeing good earnings numbers. so far with the q4 earnings season, about a third of the companies have reported. they have constantly ratcheted
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up those estimates for q4. 2013 has pulled back, 6% growth versus 6.5, so 2013 still look positive but not phenomenal so we're hoping for an up year. >> here's what i want to know. any way to measure enormous amount of money on the sideline? end of 2012 all we were talking about how everybody was sitting on cash and everyone in warrington was driving us crazy because of the fiscal cliff, couldn't come to an agreement. sitting on cash and all this stuff on the shelf that everybody said would come out n 2013? how do you measure the money on the sidelines and how much more firepower is left? >> for that, one of my colleagues, he did a really interesting study on just exactly how much, particularly for private equity. for equity, you know, i'm not -- it's hard to say. >> and when you look at the balance, there's no yields. there's nothing out there. >> that's the point. can't get a return anywhere. >> really your best bet is going
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on the equity side because even with the volatility at least there's an upside. private equity, hey, got tons of friends just dying to buy something and there's nothing out there. >> pension funds, institutions. 401(k) plans. that's what i'm trying to figure out. has the money already found a home, or is there still lots of money on the sideline had. >> still on the sidelines? tons of firepower ready to go. still looking for kreeltds. >> we will see you again for the closing countdown, and we'll continue the conversation then. we'll be right back, as i said, that, just moments away from the close. >> and then we're moments away from facebook earnings. full team coverage on facebook. the number is coming up right here top of the hour. back here in a moment on "closing bell." twins. i didn't see them coming.
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without any surprise fees. ♪ it's not rocket science. it's just common sense. from td ameritrade. welcome back. on the floor for the closing countdown with maria. we're not going to get 14,000 today. >> no. how do you feel about the market now? does it still have that feel that it wants to go higher? because that's what we've been watching. >> being told by the smartest guys on wall street that they are still big money buyers on the sidelines and this market continues to want to go higher. of course we're going to get back and fill and, of course, we'll have times when the market will react to knee jerk reactions on some things but you have to believe in the money on the sidelines, pension funds, 401(k)s, big-money investors with few alternatives. interest rates at rock-bottom levels, europe still with a problem. u.s. stocks, multi-nationals
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paying dividends are the only game in town. that's what is behind the rally. >> erin gibbs and matt cheslock. money coming into the market, equity market inflows over the last couple of weeks rather substantial. is the money too late or is it well timed to take us higher? >> still returns to take us higher, absolutely. the money is coming in, and like i said we are starting to recover. we're starting to see hints of a recovery in europe as well as still improvements in the u.s. we can still come back and see higher valuations. >> what about you, matthew, what are you seeing at the end of the day here? down 50 points on the industrial. any info at the end of the day what. are you seeing in terms of the balances? >> not going to give me insight what. i'm looking at today is the transports. see them breaking down. led us a lot higher. some of the sectors taken us higher, starting to cool off. maybe look at gold. maybe we're poised to break out in gold and especially gold equities. really, really languished during the bull market. >> what do you want, the transports to hit a new high
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every day? tough crowd. >> actually i'm very bearish so i'm going against most everyone's opinion, and that's the way i'm looking at it right now. these are some of the sectors i'm looking at. >> you know what i find really compelling is the fact that when you look at the valuations here they are really not excessive. the forward-look pe right now i think is at 14. trailing pe is at 16, so you can't make the argument that in fact even though we have seen this huge run up that things have gotten overpriced. >> so that leads to the argument what about multiple expansion, right? the biggest bulls on the street that jeremy segal thinks we could hit 17,000 and things like that, think we'll get multiple expansion. do we or not? >> i certainly think there's room for expansion. i don't think quite that much. i'm looking for more of a 10% increase, looking at earnings where we expect the u.s. to go, 2%, 3% gdp and 2% in the s&p 500 is a reasonable expansion. >> technology has been a laggard, no surprise here going to grow faster than the rest of the economy? where is the growth and where
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are the laggards in terms of earnings from your standpoint? >> so the two that i'm really looking for for this year and next are consumer discretionary, and also not so much technology. a little bit on the russells. the biggest laggards we're looking at are materials, energy and utilities and also for some sectors, defense and health care. we just saw that they were the industries that were really pulling back in the fourth quarter for gdp, and we've been saying that for months, we really want to stay sidelines from defense and health care. >> no surprise. all that sequestration cuts coming. i'm going to go to the top of the hour and getting ready for facebook numbers. facebook numbers at the top of the hour. see you in the next house, scott. >> see you tomorrow, scott. with facebook coming up, so, matt, i don't really see anybody falling out of bed down here about the gdp number which was a shocker. >> right. >> to most people. what do you make of that as it relates to what the market could do? >> well, everyone has been looking at the silver lining to
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every report out there. one thing that concerns me, some of the volatility in single stocks, netflix up 72% in two days. very frothy to me. apple going from 700 to 450 and now people are saying i'm going to cut apple at 450. you know, whoa, whoa. you know, 700 you guys loved it so some of these things what brings me to cause. the gdp number, that's alarming to me. real is. you know, the government has -- has sponsored us as an economy for so long. now they are cutting spending and now the gdp number comes out and we're looking at silver linings. >> still a very active fed and active landscape central bank easing around the world. that has to factor into this discussion, too. >> if we're going to have a true recovery, it's going to be a housing recovery, and we're still seeing better housing numbers. >> okay. thanks so much. very good. facebook numbers about to hit the tape. maria and the experts are breaking it all down, and she
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takes the ball right now. it is 4:00 on wall street. do you know where your money is? welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. s&p 500 struggling to say above 15 up. a speed bump on the road to 14,000 for the dow jones industrial average after a dismal gdp report. finishing the day on wall street, dow industrials down 45 points on the session, 13,909, not the low but pretty close to it. s&p, volume down and nasdaq gave up a third of a percent, down to 3142 and the s&p 500 back and forth between 1499 and 1500, struggling to stay above. looks like we are close but we got t.1501 on the s&p 500, down about 6 point. moments away from facebook's fourth-quarter earnings. we'll get you those numbers as soon as they hit the wires. first let's wrap up today's market activist with ethan harris, bank of america and
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merrill lynch and maria battel and eric from russell investments and our own rick santelli. guys, let's kick things off in a few minutes. will be getting facebook's earnings so i may have to interrupt once we get the numbers out. meantime, let's talk about the markets in terms of what you're seeing. ethan harris, your thoughts on the gdp report? does that reflect what's been going on in terms of money moving into stocks or not? >> i think the gdp report should be basically tossed in the wastebasket. i mean, this report had so many weird components to it. if you strip out all the flaky stuff there, we're still in a 2% economy. a lot of things to worry about out there, but fourth-quarter growth is fine. >> mark, you agree with that, dump the gdp report in the wastebasket? >> yes, i think it was expected. a lot of companies and people were paralyzed over the government discussions and i think we'll see acceleration move in the second half of the year now that we have clarity on
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taxes and so forth. >> let's say we ignore the gdp report and don't put much credence into it. do you want to be investing any differently post those numbers? >> i don't think so. i feel most remarkable about the gdp numbers, the market ignored it. we think you should ignore it and the market ignored it which means they are feeling the fed is bullying them into risk assets has finally taken an effect and they don't feel like they have anywhere else to go. >> right, right, right. that's what i was just saying a moment ago because you've got corporates sitting on a huge amount of cash, 3.6 trillion and they are paying out dividends what. are the alternatives today? margie, what do you think? >> well, i think this is a year that the equities are going to continue to do better that be fixed income. i think we hit the influxion point late in 2012. year-to-date equities are outperforming fixed income, all categories. i think that's the trend. i think it will be equities for the next few years. >> rick santelli, that's what we've been seeing money coming out of fixed income. is this trade

Closing Bell
CNBC January 30, 2013 3:00pm-4:00pm EST

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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